Sales revenue First Quarter $ 15,800 Second Quarter $21,300 Cost of goods sold Beginning inventory Purchases $ 5,200 $ 4,700 3,800 13,200 Goods available for sale 9,000 17,900 Ending inventory 4,700 10,000 Cost of goods sold Gross profit 4,300 11,500 7,900 13,400 Expenses 6,300 Pretax income 5,800 $ 5,700 $ 7,100 During the third quarter, it was discovered that the ending Inventory for the first quarter should have been $5,180. Required: 1. What effect did this error have on the combined pretax Income of the two quarters? 2. Which quarter's or quarters' (if any) EPS amounts were affected by this error? 3. Prepare corrected Income statements for each quarter. 4. Prepare the schedule to reflect the comparative effects of the correct and Incorrect amounts on the Income statement. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement. 1st Quarter 2nd Quarter Incorrect Correct Error Beginning inventory S 5,200 $ 5,200 0 No error Ending inventory 4,700 5,180 $ 480 under Incorrect $ 4,700 10,000 Correct Error S 5,180 S 10,000 480 0 under No error Cost of goods sold 4,300 3,820 480 over 7,900 7,420 480 under Gross profit 11,500 11,680 x 480 under 13,400 13,580 x 480 over Pretax income 5,700 5,880 x 480 under 7,100 7,280 x 480 over
Sales revenue First Quarter $ 15,800 Second Quarter $21,300 Cost of goods sold Beginning inventory Purchases $ 5,200 $ 4,700 3,800 13,200 Goods available for sale 9,000 17,900 Ending inventory 4,700 10,000 Cost of goods sold Gross profit 4,300 11,500 7,900 13,400 Expenses 6,300 Pretax income 5,800 $ 5,700 $ 7,100 During the third quarter, it was discovered that the ending Inventory for the first quarter should have been $5,180. Required: 1. What effect did this error have on the combined pretax Income of the two quarters? 2. Which quarter's or quarters' (if any) EPS amounts were affected by this error? 3. Prepare corrected Income statements for each quarter. 4. Prepare the schedule to reflect the comparative effects of the correct and Incorrect amounts on the Income statement. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement. 1st Quarter 2nd Quarter Incorrect Correct Error Beginning inventory S 5,200 $ 5,200 0 No error Ending inventory 4,700 5,180 $ 480 under Incorrect $ 4,700 10,000 Correct Error S 5,180 S 10,000 480 0 under No error Cost of goods sold 4,300 3,820 480 over 7,900 7,420 480 under Gross profit 11,500 11,680 x 480 under 13,400 13,580 x 480 over Pretax income 5,700 5,880 x 480 under 7,100 7,280 x 480 over
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter5: Accounting For Retail Businesses
Section: Chapter Questions
Problem 41E: Cost of goods sold and related items The following data were extracted from the accounting records...
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